Wednesday, December 10, 2008

Ford Can Math Too

There has been a seemingly endless debate on whether and how much higher labor costs are for U.S. auto makers vis a vis non-U.S. manufacturers.

The NY Times reports Ford's version of some new math that attempts to get to the heart of the cost debate. The author does a good job debunking the myth that average labor costs for the big 3 are $71/hr. That number includes costs to fund retiree benefits and has no relationship to current production. That is part of the problem, though.

Since the auto makers have no way of severing their core operation from the onerous retiree costs that they spent decades saddling themselves with, no amount of bridge debt can change the current and future reality.